Saturday, January 29, 2011

The Butler Signed It.

God, what an awful pun. Naturally, I couldn’t resist.

Continuing my quest to remain three news cycles behind the times, it’s time to discuss the Billy Butler contract even while all the news is about the Royals’ farm system. Specifically, Baseball America officially ranked the Royals as having the #1 farm system in all of baseball on Monday; Keith Law of ESPN.com acknowledged his agreement (but with the Tampa Bay Rays not far behind) on Wednesday. Law also issued his Top 100 Prospects list on Thursday, and The Big Five – Hosmer, Myers, Moustakas, Montgomery, and Lamb – were all in his Top 41. (The only other Royal on the list was Danny Duffy at #98, although both Jake Odorizzi and Chris Dwyer were on Law’s list of ten “just missed” prospects.)

And to top it off, MLB.com unveiled their Top 50 Prospects on Tuesday, which included six Royals – The Big Five and, somewhat surprisingly, Odorizzi.

I think my word count on the subject of the farm system over the past 12 months is well into six figures at this point, so I don’t have much to add right now. The most important thing to take from all the accolades is that they were so expected that they almost felt anticlimactic. That the most well-respected prospect analysts in the business acknowledged that the Royals had the best farm system in baseball wasn’t a revelation. It was a coronation. Now comes the hard part: turning promise into production.

When it comes to that very transmutation, Billy Butler represents a nearly best-case scenario. Butler was a Top 30 Prospect twice – #29 by Baseball America in 2006, #25 in 2007 – who only ranked that low because of his almost comical lack of defensive value. As a hitter, Butler compares favorably with anyone in the Royals’ farm system today, or frankly, anyone in the Royals’ farm system ever. Eric Hosmer hit .338/.406/.571 in his breakout 2010 season. Butler’s career line in the minors was .336/.416/.561, and he was in the majors less than two months after he turned 21.

Butler was back in the minors for a brief refresher course less than two months after he turned 22, which should serve as a reminder that even for the best of prospects, even for the ones that ultimately make it, setbacks are the norm. It was easy to assume on his way up the chain that there was no way that Butler wouldn’t make it, that he was too talented to fail. He didn’t fail, but it’s a testament to his work ethic as much to his talent that he was rewarded with the contract he signed earlier this week.

In his first two seasons in the majors, Butler hit .282/.334/.420. In his first two seasons – the same two seasons (2006 and 2007) – Alex Gordon hit .253/.332/.421. Butler and Gordon had the exact same OPS+ (99) in that span. But while Gordon floundered in 2008 and 2009, over the last two years Butler hit .309/.375/.480, and his 96 doubles in that span are the most in Royals history by a player in back-to-back seasons. We knew four years ago that Butler had a boatload of talent, but we didn’t know if his potential was a promise or a curse. Today we no longer have to wonder about what Butler will be, because what he already is is good enough.

Which isn’t to say that he doesn’t have the potential to get even better. Butler will still be 24 until a few weeks after Opening Day. Unless someone like Moustakas forces his way onto the roster, the only hitter on the Opening Day roster younger than Butler will be Alcides Escobar. He’s the best hitter in the lineup, and the second-youngest.

So the answer to the question, “Was Butler worthy of a long-term deal?” is a pretty resounding yes. The specific cost-benefit analysis has already been done by Matt Klaassen here, so I won’t try to reinvent the wheel. I’ll just say that as long as Butler remains reasonably healthy, and as long as he doesn’t undergo a shocking collapse at the plate, the worst the Royals can do on this deal is break even.

We can’t completely discount the possibility of a collapse. Butler is a hitting savant, but he’s not the most athletic guy in the world. It’s a well-established principle that young hitters with “old hitters’ skills” – guys that can’t run well or play defense or hit for average, but can take pitches and occasionally hit one into the next county – tend to peak at a young age.

The worst-case scenario for this would be someone like Ben Grieve, who was the #2 overall pick in the draft out of high school, in the majors at 21, the AL Rookie of the Year at 22. After three eerily consistent seasons as a borderline star hitter for the A’s, they traded him to Tampa Bay in the massive three-way deal that sent Johnny Damon out of Kansas City and brought us (joy!) Angel Berroa and Roberto Hernandez. The A’s must have known something, because Grieve was never more than an average hitter after that; he was done as a full-time player at age 27 and out of the majors at age 29.

Grieve comes to mind when I think of Butler because, like Butler, Grieve’s main flaw even at his peak was that he hit too many ground balls. And just like Butler, when Grieve was 24 years old – his last year with Oakland, and his last good year – he led the American League by grounding into 32 double plays.

That eerie coincidence aside, the comparison isn’t really fair to Butler, because while Butler may have the physique of an older player, he doesn’t have the batting style of one. Grieve hit .288 as a rookie and that was his career high; Butler has hit over .300 each of the last two seasons. In his five seasons as a regular, Grieve drew at least 63 walks and struck out at least 108 times each year; Butler has slowly learned plate discipline, topping out at 69 walks last year, but his career high in whiffs is 103 – and he struck out just 78 times last season.

Butler has an unusual blend of skills: he’s a right-handed hitter with no speed and, owing to his propensity for groundballs, only mid-range power – but despite his lack of speed, he succeeds in hitting for a high average. The first two comps I thought of were Carney Lansford and Bill Madlock, but both Lansford and Madlock had pretty decent speed – both guys stole 30 bases in a season once. (Lansford stole 37 bases in 1989, at the age of 32, which shocked the hell out of me when I looked it up.)

A look at Butler’s ten most comparable players (through age 24) on Baseball-Reference.com only confirms the notion that he’s a historically unusual player. The ten players are all either left-handed hitters (John Olerud, Kent Hrbek, Nick Markakis, Carlos May, Carl Yastrzemski, Keith Hernandez), athletic guys who played good defense (Chet Lemon, Ellis Valentine), or an exact contemporary (Delmon Young). The presence of Yaz on the list makes me feel good, as I spent some time comparing the two players last season.

I’m ignoring Tony Horton as a comparison, as Horton’s career came to an abrupt end in 1970, at the age of 25, when he attempted suicide; while he survived, the emotional stress of the game prevented him from ever returning to the majors. But even ignoring Horton, it has to worry you a little that two of Butler’s comps – May and Valentine – were basically done as everyday players in their mid-20s, after playing at an All-Star level for several years.

I don’t think that the experiences of players like May and Valentine and Grieve are specifically relevant to Butler, because I think he’s a different kind of player than all of them. But I think their struggles are generally relevant, in that they serve as a reminder that not all players follow the aging curve faithfully; they don’t all peak at the age of 27 and then slowly decline. Butler is 24 years old, he’s improved as a hitter in almost every season, and it’s tempting to think that the parabola of his career is still sloping upwards. But there’s always a risk that it’s not.

As Jeff Zimmerman details here, if Butler has tried to change his approach to hit more balls in the air, it’s not showing up in the results. While I personally think that Butler is as comparable to Edgar Martinez as anyone else – and Martinez wasn’t even an everyday player in the majors until he was 27 – there’s a risk Butler will never be a better hitter than he is now.

All those risks, though, are fairly priced into his contract. Butler makes $5 million this season, counting his signing bonus, and $8 million in each of the next three seasons. (There’s also a $1 million option on the fifth year.) The way the contract is structured is interesting; it’s more front-loaded than most contracts given to arbitration-eligible players. When the terms of 4 years, $30 million were first announced, I expected the breakdown to be something along the lines of $4/6/9/11, steadily increasing as he got closer to free agency.

From an owner’s perspective, in a perfectly rational world you would always want a contract to be as back-loaded as possible – ideally you’d pay Butler the league minimum for three years and then $28.8 million in 2014. Inflation will make the money at the end of a contract worth less, and you can invest the money now and pocket the interest you make in the interim.

But in the real world, where teams rarely are allowed to carry a budget surplus from one year into the next, front-loading this contract makes a lot of sense. Thanks to Gil Meche’s retirement the Royals had plenty of payroll space for 2011, and they famously had almost no payroll obligations in 2012 – Butler is now the only player on the major league roster who has a guaranteed contract beyond the upcoming season. The Royals could afford to pay him a little more this season – in fact, they very well might perceive the need to up the payroll in 2011 just to get the Players’ Association off their backs – and in return they have a more manageable salary in 2013 and 2014, when presumably they will want to be aggressive in free agency to add the final pieces for a team that’s in playoff contention.

Speaking cynically, keeping Butler’s salary lower towards the back end of the contract would also make him easier to trade, should the Royals decide to do so. I don’t think this is particularly likely, but if Kila Ka’aihue proves to be as capable a hitter as I think he can be, the Royals will face a difficult decision once they decide Eric Hosmer is ready. The easy – and likely – solution will be to trade Ka’aihue for whatever they can get for him. The bold decision would be to move Hosmer to the outfield and try to get all three bats in the lineup.

But I wouldn’t discount a Butler trade. The Royals have spent much of the last six months trying to add more right-handed bats to the system, anticipating a need to protect Hosmer and Moustakas from a wave of left-handed pitching. But after the Greinke trade, the Royals’ future lineup has right-handed hitters at shortstop (Escobar), center field (Cain), second base (Colon or Giavotella), and now right field and catcher a well, as Wil Myers has formally moved to the outfield, leaving Salvador Perez as the reigning catcher of the future. Hosmer and Moustakas are actually the only two left-handed hitters in the projected lineup. If the Royals commit to Butler and trade Ka’aihue, then they will have at least six right-handed hitters in the everyday lineup, with left field still to be determined. That’s a potential problem lurking down the road.

It’s a problem that can be addressed down the road, because with this contract the Royals have locked up their best hitter while still maintaining flexibility, both in terms of personnel and in terms of money. I was happy when I thought it was a four-year deal for $30 million; I was ecstatic when it turns out it was a five-year deal for $41.5 million and a voidable fifth year. It’s reported as “four years with a club option”, but it’s better to think of it as a five-year deal, one that buys out not one but two years of Butler’s free agency, only with the added bonus that the team can opt out early if things turn sour. Even at five years, the contract ends before Butler’s 30th birthday, and the horror stories above notwithstanding, most of the guys with “old players’ skills” – guys like Alvin Davis and Travis Hafner and the like – didn’t really lose it until they turned 30.

This is, I believe, only the second contract of the Dayton Moore Era that involved a true club option – as opposed to the mutual options which get handed out like candy. The other contract with a club option is a doozy – Joakim Soria’s guaranteed contract ends after this year, but the Royals have options for 2012, 2013, and 2014. A club option is one of the greatest weapons in a GM’s financial arsenal – it grants the team a big upside with minimal downside. While I’d like to see the Royals bargain their way to more club options in the future, at least Moore had the wherewithal to deploy those club options for two of his best players.

As an analyst, I love the contract, because I think that the Royals got a substantial risk discount on this contract – the odds Butler doesn’t earn his money are dwarfed by the odds that he plays at such a high level that he would have made millions more going year to year. That’s not to say that Butler got hosed – he’s guaranteed 30 million dollars, and that’s past the threshold it should take for any player with a modicum of financial sense to be set for life. But it was definitely a win for the club.

As a fan, I love the contract, because it helps to wash away the bitter taste in my mouth of watching Zack Greinke force his way out of a town, replacing one star player under a long-term deal with another, albeit lesser star. I love the deal because it only continues the momentum that Moore has established this off-season, making a serious of shrewd short-term plays without putting up any roadblocks, or even speed bumps, for his cache of prospects. I love it because I think Butler has stepped up into a leadership role in the clubhouse, and has not only embraced the promise of the team’s farm system, he seems committed to helping to nurture that promise along.

Mostly, I love the deal because I love watching Billy Butler hit. And I’m looking forward to watching him do that – and eventually I’m going to get all of you to start calling him “Bam Bam”, dammit – for the next five years.

25 comments:

I've always thought Butler resembled a young Edgar Martinez too. Good signing for the Royals. Can't wait till the young players start arriving. I also think there is an outside change that we could sign Greinke when his 2 years are up in Brewtown.

Amen Rany ... I really feel BB can be the on and off-field leader for the upcoming 'Royal Rising'! I was stunned to read that some KC fans didn't approve of it for one reason or another. Billy's a gamer and I'm excited that DM deemed it important to lock him up.

I wonder if Rany linked back to his comparison of Butler to Carl Yastrzemski just so that we could see he correctly (and eerily) predicted Billy's GIDP total for the year. :-) Great work as always Rany.

I guess I'm ok with the deal... But what happens if BamBam goes 30/55/120??? Is Butler going to demand a restructuring of his deal, ala every other Major-Leaguer? Seriously, how many contracts live out the initial terms? But that kind of production is probably unreachable, especially if The Yost Infection bats Kendall 2nd again. Pffffttttt!!!

This is a good signing for the Royals because Butler is a stable, consistent, & productive player.

I like hearing that he is becoming more of a clubhouse leader. That is something we are going to need with the slew of young players that we have coming. In the past, Billy to me seems to be a quite, but determined type. Personally I never bought the DeJesus is "too old" pitch considering the young talent we have coming in the future. DeJesus, to me was going to be the clubs leader.

Lastly, there are going to be a lot of folks out there this year and next that say "who the heck is this guy" on almost every at bat because the casual fan does not follow a team's farm system. Butler will be the familiar face for fans and be the face of the franchise.

I really like Butler at bat. But can we please just install him at DH. I know he has improved in the field, but c'mon he is still pretty bad.

Kila is not all that much better in the field than Butler but he is better. And I have no first hand knowledge of Hosmer, but what I have read is that he is a little above average. It is my take that Hosmer would be the best long term option of the three to play the field. So I disagree with the notion of the possible move to the outfield for Hosmer.

As far as Butler at the plate, I would like to see some type of comparables along the lines of power potential. I have no numbers to base my opinion on, but I am of the belief that the high GIDP numbers are an anomaly. And I think his HR numbers will increase somewhat significantly in the next few years. I think 30 is a possibility this year and I don't think 40 is out of the question in the upcoming couple of years.

I just think he will get stronger, and if he works at it, like he seems willing to do, I think he can lose some of the extra weight. I think some of the doubles will turn into home runs, and I also think, as Rany states that his parabola is still on the upward swing.

I like the contract, because of Butler's age, and because he is not likely to decline significantly by the time the contract is done.

I found it interesting that following the signing of the contract Butler was doing some serious backpedaling about being a full-time DH. Last year he was pretty adamant that he wanted to play defense. After the signing he was quoted (can't remember where) as saying he'd be fine in a full-time DH role if that was best for the club.

I'm guessing defensive positioning must have been one of the non-financial topics of the negotiation.

Concerning the time value of money and the investment of future payment obligations, I believe the importance is over stated a bit.

Using your expected payment schedule of $4/6/9/11, the Royals would have an additional margin of $3 million to be reinvested. At a reinvestment rate of 3% (which is likely optimistic given the short investment window), my math says that the royals would earn an additional $186,354 over the actual $5/8/8/11 contract.

The difference in the hypothetical "best case" scenario is a little more pronounced, however. At the league minimum of $400k/400k/400k/28.8, the Royals would earn $1,145,154 in additional interest. But even this amount is only 3.8% of the entire contract. I'm not suggesting that it's a pittance, but it is also probably not worth having the subsequent awkward conversation with your player.

So in all, back loading a contract, while nominally valuable, is not practically worth fussing over.

I've also read about the role of inflation in backloading. 11.5 million won't be worth as much in 2016 as it is now...but inflation over 4-5 years is as negligible as gaining interest, if not more so. To make a real difference inflation wise, you'd have to compare it over at least a 12-15 year period, if not 20 years.

The only real gain in backloading is when you have multiple big contracts that last over several years with several millions being exchanged. If Meche hadn't retired and was still getting his 12, it's easier to pay Butler 3 (or 5 counting signing bonus) than to pay the 7.5 average. By the time you have to pay the second (or third, fourth, or fifth) player the bigger portion of his (their) contract(s), the first player is off the payroll. That's really the only substantial gain from backloading. The biggest risk, injury, is likely offset by getting an elite player like Butler for very little in the early going. (For this example, Butler isn't as good a point as Greinke or Soria as his contract has a fairly long plateau.)

you have a loyal follower. Everyone who talks to me about the Royals, I tell them about your blog. I appreciate your insights. I feel like they bring me closer to the Royals and make me a better fan. Thank you

This guy is the slowest, most slovenly ballplayer I have ever seen at his age and Kila-Bomb makes him look ridiculous with a glove, which he already is even without Kila's help.

He clogs up the basepaths and is a serious annual threat to the major league GIDP record as well and will be every year he sees regular duty.

This guy is a classic example of somebody you want to trade while he has value because, unless he discovers the salad bar, he's going to eat his way out of the game ala Cecil Fielder, Mo Vaughn, and some others, and, soon to join that club, Prince Fielder.

As you said, he has old guy skills and he isn't even an old guy! The Grieve example is apropos and I bet Fat-Boy's (what we call him around our house) skills are seriously depleted by end of the contract.

As I would challenge you to name me any old fat person you know, name me any older fat baseball player you know that has played productively as a hitter into his '30's. The answer, is few.

The sooner Mr. Completely One Dimensional disappears from this team, the better.

I submit that if the Royals had had any kind or team at all during his tenure, that people would be clamoring to be rid of him or upset if he did ANYTHING other than DH on a baseball field. On a better team, his deficiencies would really stand our more than they do already

Someone once said it's hard to soar like and eagle when you are flying with a flock of turkeys.

In Billy's case, it's easy to soar like an eagle when you are flying with a flock of turkeys, even if you are actually a pigeon.

When Billy leaves, I hope he takes his bubble gum with. Nothing like having a gum chomping seventeen year old girl on your team.

It's pretty sad when a guy like this is your "star" player and people are happy his services have been retained.

The above poster is right. Everyone wants to see Lou Gehrig and Ty Cobb, not Ted Williams and Babe Ruth.

Fielder and Son and Vaughn only combined for 839 HR and 3818 games and two of the three only had/have career OPS+ over 130. Like Williams, none of the three ran/run the bases like a doe on an early misty spring morning. Like the Babe, they all come with appetites entirely too big. Like Jeremy Brown, they look really bad in jeans. I think I've read that last line somewhere before, but I can't remember where.

Jack Clark, Darrell Porter, now THOSE are premium athletes! Everything they did was so fluid!

Just heard an interview with Francoeur on Hot Stove with Denny. I was impressed with him. I know all of the knocks on Francoeur....but after hearing him talk and listening to his attitude, you can't help but root for the guy. I'm a fan already. You can chalk it up to pre-spring training enthusiasm, but I don't think it's out of the realm of possibility that a slimmed down, focused, motivated, and Seitzer influenced Francoeur can have a career saving and rebound year. Like I said, I'm rooting for him already.

1. Mo Vaughn's last season as a productive player was in 2002 at age 34 . He was through before the end of the next season and never played again.

2. Cecil Fielder's last productive season was in 1998 at age 34. He never played again after that season.

If these guys had taken care of themselves, particularly in this day and age, they would have had longer and more productive careers than they did. They both ate their way out of the game, just like Cecil's son Price is going to do if he doesn't start taking care of his body.

They were certainly productive players (depending on what you think of a fat slugger's relative value) but they would have had better, longer careers had they chosen to eat a few more salads.

There's there's nothing I can think of that is unimportant on the baseball field...but, I am inside in the winter waiting for the remnants of a blizzard to melt, so I might be mistaken. But, it's not like they're of equal value. Mr Completely One Dimensional is one-dimensional at the most important part of what a non-pitcher does, hitting. It's not like he's Herb Washington or something. Washington was a slim and athletic "player". Yeah, the above ate their way out of the league, so to speak, but they also had very long careers. And some people are as they are...and there's a good chance that they would have lost a considerable amount of their productivity if they'd changed enough to make a difference. There's plenty of value to be had out of Billy Butler to be happy about extending him to a four year deal when he's 25. If he were 30, 35, yeah, I get it every single day...and I'd be pissed about it. And how about Moose? He's not as fat and he's more athletic than BB, but he's not good defensively. He's not fast. He's not athletic like Hos/Myers. And if the three of them reach their potential within the four seasons, Butler will have to play second fiddle to them all...but if he's still doing then what he's doing now, he'll still be a productive and very useful member of the Kansas City Royals.And Whitey had plenty of players that were lacking many skills. How many dimensions did White have in the Whitey years? Wilson?